Samsung could displace Intel as the world’s biggest chip company in 2017

Samsung's revenue is being driven up by increases in NAND and DRAM pricing.

Intel has been the world's biggest chipmaker by revenue since January of 1993, when sales of its 386 and 486 processors helped it surpass Japanese companies like NEC and Toshiba. The release of the first Pentium CPU later that year and the proliferation of Windows 95 and 98-powered PCs over the next decade helped keep Intel on top. The company continues to grow today—revenue from chips for PCs, servers, and Internet of Things devices is all still increasing year-over-year.

But a new report by IC Insights suggests that Intel might not be at the top of the heap anymore.

Further Reading

That's because demand for DRAM and NAND flash memory are both growing at double-digit rates, and Samsung in particular is raking in revenue. Assuming that both companies perform as expected in the second quarter of 2017, Samsung's semiconductor business could pull in $14.6 billion in revenue for the quarter, compared to $14.4 billion for Intel. Even if Samsung can't pass Intel in the second quarter, it seems likely to happen soon, given that Samsung's chip business is one of the brightest spots on its balance sheet—in Q1, revenue was up over 40 percent year-over-year.

On top of the RAM business, Samsung also says it's seeing solid demand for 14nm SoCs, image sensors, and other smartphone chips. The company expects its new 10nm process to keep the business growing. Samsung manufactures its own Exynos SoCs as well as some of Qualcomm's Snapdragon chips and some of the A-series chips Apple uses across its iPhone, iPad, iPod, and Apple TV lineups.

Andrew Cunningham
Andrew has a B.A. in Classics from Kenyon College and has over five years of experience in IT. His work has appeared on Charge Shot!!! and AnandTech, and he records a weekly book podcast called Overdue. Twitter@AndrewWrites

Is it meaningful to combine it all, or is this an apples-to-oranges comparison?

Well there are definitely physical differences, but I hazard a guess that it's not a big enough difference that the big three couldn't compete with each other. The bigger differences between the two is that RAM and Flash are commodity markets, where as CPUs aren't. Intel started as a memory company but pivoted to CPUs and chipsets almost immediately after getting design wins and especially the biggest of them all from IBM.

It's really a credit to Samsung that they're performing so well in so many different segments. I'm no fan or their software division, but the SSDs they're making are really pretty amazing.

Always great to see competition in the tech sector. Will be curious to see how Intel responds, because all I've seen so far are PowerPoints and zero meaningful advancement from them in x86 over the past couple years.

Good thing Trump has made america great again and threatened nuclear war on that peninsula.

Sorry, sorry, simply could not resist!

He threatened to blow up NORTH Korea.

He won't blow up South Korea, that's where we're gonna get our border taxes from!

North Korea and South Korea combined is the size of Utah. Imagine blowing up northern Utah and expecting the southern bit to come out unscathed?!? Push comes to shove, I think the NK regime will simply be annihilated - but the North may be devastated and the South economically wrecked.

Not surprising when Intel lacks any significant penetration in the mobile market and their desktop side has been at a standstill for the last ~5 years. For the desktop side at least, Intel sucks at competing with itself.

Is it meaningful to combine it all, or is this an apples-to-oranges comparison?

I believe both companies fab all 3, although I cannot recall hearing of Intel RAM.

If I recall correctly, NAND has a more regular structure and so it is easier to hit smaller feature sizes. And I think a NAND chip is usually a bit less expensive than a CPU. But the chart is comparing the companies based on total sales ($), so that should all come out in the wash.

North Korea and South Korea combined is the size of Utah. Imagine blowing up northern Utah and expecting the southern bit to come out unscathed?!? Push comes to shove, I think the NK regime will simply be annihilated - but the North may be devastated and the South economically wrecked.

In the unlikely event that we ever go to war with North Korea I doubt it will involve blowing things up. That's not how we conduct warfare nowadays, precisely for the reasons you mentioned.

That, and the last thing we need to do is endanger K-pop stars. That would get us in serious trouble with Japan and otaku across the world.

Is it meaningful to combine it all, or is this an apples-to-oranges comparison?

They all fall under the category of semiconductors, typically integrated circuits. Technically, this should include GPUs, audio processors, network processors, and other things. A comparison between them would be like comparing a family sedan to an airplane: they're both vehicles used to transport things, but they have different appearances derived from different utility.

Is it meaningful to combine it all, or is this an apples-to-oranges comparison?

They all fall under the category of semiconductors, typically integrated circuits. Technically, this should include GPUs, audio processors, network processors, and other things. A comparison between them would be like comparing a family sedan to an airplane: they're both vehicles used to transport things, but they have different appearances derived from different utility.

While this is true, there are some significant differences in the markets they're in. With CPUs Samsung is in the low margin mobile market. Most of the rest of their fabrication is NAND and DRAM which can be very volatile in their prices. DRAM prices have gone back up recently but they go through a lot of boom or bust cycles. Intel pretty much exclusively wants to play in areas where they can get high margins. When it comes to DRAM and NAND they just partner with Micron to get first access but not have it hurt their margins.

Is it meaningful to combine it all, or is this an apples-to-oranges comparison?

I believe both companies fab all 3, although I cannot recall hearing of Intel RAM.

If I recall correctly, NAND has a more regular structure and so it is easier to hit smaller feature sizes. And I think a NAND chip is usually a bit less expensive than a CPU. But the chart is comparing the companies based on total sales ($), so that should all come out in the wash.

Intel used to fab RAM, but unless something drastic is different, they don't anymore.

They also don't directly fab NAND - it's through the Micron joint venture, so they lose out there too. All of the NAND they make presumably just goes into Intel SSDs, which, while a substantial portion of the enterprise market, probably aren't remotely close to Samsung selling NAND to its own SSDs, GPUs, RAM, and any number of SoCs and other things.

It seems like a weak comparison to me given all of that - Samsung is just in far more semiconductor businesses overall than Intel, so passing up Intel by revenue isn't totally impossible to believe. If you looked at the revenue from Samsung's CPUs and their SSDs only, it would likely be a different comparison.

Obviously you can't just exclude Samsung's businesses in this comparison because Intel isn't in them, but if Intel had wanted to get into those higher revenue low margin segments just to retain the title, I'm sure they could have.

I don't know Samsung's semiconductor Gross Margin, but I'd be pretty surprised if it came close to Intel's healthy 60+%.

Is it meaningful to combine it all, or is this an apples-to-oranges comparison?

I believe both companies fab all 3, although I cannot recall hearing of Intel RAM.

If I recall correctly, NAND has a more regular structure and so it is easier to hit smaller feature sizes. And I think a NAND chip is usually a bit less expensive than a CPU. But the chart is comparing the companies based on total sales ($), so that should all come out in the wash.

Intel used to fab RAM, but unless something drastic is different, they don't anymore.

...

I don't know Samsung's semiconductor Gross Margin, but I'd be pretty surprised if it came close to Intel's healthy 60+%.

This. Intel got out of RAM when it became clear it was becoming a commodity.

Who knows, they may have little choice but to get back into the market as CPU generations aren't differentiating as much as they used to. Moreover, high volume customers like Apple, Google, Amazon, and Facebook are turning to in-house CPU designs or leasing spare CPU bandwidth which puts even more pressure on Intel.

Did you know that Samsung started in the late 1920s as fishmongers? They continually reinvented themselves over and over since then, going into everything and conquering most of what they entered. Unlike our companies that become infested with Master of Bull Arts (MBAs) who end up strip mining the companies (e.g., Digital, Xerox, IBM, GE, RCA, Kodak) to extract the wealth.

The critical part of RAM and NAND are very large repetitive structures made of only a few different types of devices (transistors, etc)

CPUs, SoC and other kinds of logic chips are made of very varied structures, made of a lot of sub-structures and a larger variety of devices.

This lead to a fork in the development of semiconductor manufacturing processes(a) Processes for general purpose logic(b) Specialized processes for DRAM, NAND, etc.

The development of state of the art processes for general purpose logic is very very expensive.intel is the last company to do it only for it's own internal purposes.The other remaining few (TSMC, Samsung, Global Foundries) make the process available to 3rd party chips.And they charge 40-50% margins on the chips to recoup the investment.

On the other hand, all the DRAM and NAND manufacturers develop the process only to manufacture their own DRAM/NAND chips.They also sell their chips with much lower margins.

Quote:

Is it meaningful to combine it all, or is this an apples-to-oranges comparison?

Not really, in my opinion.You could compare intel's revenue with TSMC's revenue with Samsung's revenue from their general purpose logic processes.Or to be really pedantic, to compare the revenue they get from their latest process.

Is it meaningful to combine it all, or is this an apples-to-oranges comparison?

I believe both companies fab all 3, although I cannot recall hearing of Intel RAM.

If I recall correctly, NAND has a more regular structure and so it is easier to hit smaller feature sizes. And I think a NAND chip is usually a bit less expensive than a CPU. But the chart is comparing the companies based on total sales ($), so that should all come out in the wash.

Intel used to fab RAM, but unless something drastic is different, they don't anymore.

They also don't directly fab NAND - it's through the Micron joint venture, so they lose out there too. All of the NAND they make presumably just goes into Intel SSDs, which, while a substantial portion of the enterprise market, probably aren't remotely close to Samsung selling NAND to its own SSDs, GPUs, RAM, and any number of SoCs and other things.

Intel's joint venture with Micron does not preclude them from fab'ing their own NAND. This old article from 2015 mentions that they may be spending some serious money to convert one of their old CPU fab's into NAND.

I live in Chile (the only place besides South Korea in which the Samsung marque exists as an auto Brand), and Samsung SM3s are quite good taxis, indeed. However, all those Samsung cars are now branded as Renault, but we still know where they are from.

Is it meaningful to combine it all, or is this an apples-to-oranges comparison?

I believe both companies fab all 3, although I cannot recall hearing of Intel RAM.

If I recall correctly, NAND has a more regular structure and so it is easier to hit smaller feature sizes. And I think a NAND chip is usually a bit less expensive than a CPU. But the chart is comparing the companies based on total sales ($), so that should all come out in the wash.

Intel used to fab RAM, but unless something drastic is different, they don't anymore.

They also don't directly fab NAND - it's through the Micron joint venture, so they lose out there too. All of the NAND they make presumably just goes into Intel SSDs, which, while a substantial portion of the enterprise market, probably aren't remotely close to Samsung selling NAND to its own SSDs, GPUs, RAM, and any number of SoCs and other things.

It seems like a weak comparison to me given all of that - Samsung is just in far more semiconductor businesses overall than Intel, so passing up Intel by revenue isn't totally impossible to believe. If you looked at the revenue from Samsung's CPUs and their SSDs only, it would likely be a different comparison.

Obviously you can't just exclude Samsung's businesses in this comparison because Intel isn't in them, but if Intel had wanted to get into those higher revenue low margin segments just to retain the title, I'm sure they could have.

I don't know Samsung's semiconductor Gross Margin, but I'd be pretty surprised if it came close to Intel's healthy 60+%.

I'm not sure Intel can properly get into low margin segments because they have too much to lose by doing so.

Their entire business model is based on having very high margins and selling high performance processors in markets that will pay the prices they're asking. Contrast that with something like phone SoCs that have to be cheap otherwise they won't sell. On top of that, there is the difficulty of balancing their different product lines so they can't afford to let Atom get too good while keeping its price relatively low because it would eat into sales of the much more expensive and profitable low-power Core models.

Is it meaningful to combine it all, or is this an apples-to-oranges comparison?

I believe both companies fab all 3, although I cannot recall hearing of Intel RAM.

If I recall correctly, NAND has a more regular structure and so it is easier to hit smaller feature sizes. And I think a NAND chip is usually a bit less expensive than a CPU. But the chart is comparing the companies based on total sales ($), so that should all come out in the wash.

Intel used to fab RAM, but unless something drastic is different, they don't anymore.

...

I don't know Samsung's semiconductor Gross Margin, but I'd be pretty surprised if it came close to Intel's healthy 60+%.

This. Intel got out of RAM when it became clear it was becoming a commodity.

Who knows, they may have little choice but to get back into the market as CPU generations aren't differentiating as much as they used to. Moreover, high volume customers like Apple, Google, Amazon, and Facebook are turning to in-house CPU designs or leasing spare CPU bandwidth which puts even more pressure on Intel.

I feel the bigger problem is now that we're scaling things horizontally that having the biggest , meanest CPU isn't going to amount to much. Sure your in-memory database might benefit from the latest Intel CPU, but when you have servers dedicated to tasks like basic I/O we're already seeing ARM handling disk arrays. Next I'm sure we'll here about network equipment like software load balancers if it hasn't happened already.

One thing Intel had going for it was backwards computability, but that doesn't mean much when the software that gets run in the datacenter is compiled on a regular basis and can be retargeted easily. And heck it doesn't even mean much in the context of Windows S and UWP.

Is it meaningful to combine it all, or is this an apples-to-oranges comparison?

I believe both companies fab all 3, although I cannot recall hearing of Intel RAM.

If I recall correctly, NAND has a more regular structure and so it is easier to hit smaller feature sizes. And I think a NAND chip is usually a bit less expensive than a CPU. But the chart is comparing the companies based on total sales ($), so that should all come out in the wash.

Intel used to fab RAM, but unless something drastic is different, they don't anymore.

They also don't directly fab NAND - it's through the Micron joint venture, so they lose out there too. All of the NAND they make presumably just goes into Intel SSDs, which, while a substantial portion of the enterprise market, probably aren't remotely close to Samsung selling NAND to its own SSDs, GPUs, RAM, and any number of SoCs and other things.

It seems like a weak comparison to me given all of that - Samsung is just in far more semiconductor businesses overall than Intel, so passing up Intel by revenue isn't totally impossible to believe. If you looked at the revenue from Samsung's CPUs and their SSDs only, it would likely be a different comparison.

Obviously you can't just exclude Samsung's businesses in this comparison because Intel isn't in them, but if Intel had wanted to get into those higher revenue low margin segments just to retain the title, I'm sure they could have.

I don't know Samsung's semiconductor Gross Margin, but I'd be pretty surprised if it came close to Intel's healthy 60+%.

I'm not sure Intel can properly get into low margin segments because they have too much to lose by doing so.

Their entire business model is based on having very high margins and selling high performance processors in markets that will pay the prices they're asking. Contrast that with something like phone SoCs that have to be cheap otherwise they won't sell. On top of that, there is the difficulty of balancing their different product lines so they can't afford to let Atom get too good while keeping its price relatively low because it would eat into sales of the much more expensive and profitable low-power Core models.

A number of misconceptions here.

(1) If you take a look at really cheap SoC like HiSilicon's Kirin 960 found in some Huwaei phones, there are basically 3 companies involved here:- HiSilicon designs and sells the SoC - ARM Holdings: HiSilicon licenses the CPU and GPU designs from ARM Holdings (and other stuff probably)- TSMC: HiSilicon has the SoC manufactured at TSMC.

Smartphone SoCs are very thin margin business for companies like HiSilicon, who "just" glue together IP blocks from other companies and have them manufactured at a foundry.But for the companies doing the design (ARM) and for the companies doing the actual manufactuing (TSMC) this is actually a thick margin business.TSMC's margin is 40-50%.

Intel's margins are not that spectacular when you take into account that they integrate the entire value chain.

While there are issues, intel could probably be competitive as a foundry or integrated design+foundry for products like smarphone SoC (ARM based, of course).

(2) The risk of cannibalization of "Core" by "Atom" is greatly exaggerated.Yes, "Atom" is good enough for a lot of things. No, intel is not afraid it will canabalize "Core" sales.Because intel is in fact willing and able to price dirt cheap "Core" SKUs with restricted performance/features; and they're willing and able to price not-so-dirt-cheap Atom SKUs either.Intel will take their options, bin them into endless SKUs and price each of them as high as the market will pay.For intel, Atom is a solution, not a problem. But's a more or less useless solution now.Atom exists because intel was trying to address markers where "Core" is either too big or too power hungry to fit.But "Core" has been coming down (eg, Surface tablets), some of the market didn't materialize (eg, micro-servers) and other has been taken by ARM (eg, smartphones).

--- snip ---Intel's margins are not that spectacular when you take into account that they integrate the entire value chain.

While there are issues, intel could probably be competitive as a foundry or integrated design+foundry for products like smarphone SoC (ARM based, of course).

(2) The risk of cannibalization of "Core" by "Atom" is greatly exaggerated.Yes, "Atom" is good enough for a lot of things. No, intel is not afraid it will canabalize "Core" sales.Because intel is in fact willing and able to price dirt cheap "Core" SKUs with restricted performance/features; and they're willing and able to price not-so-dirt-cheap Atom SKUs either.Intel will take their options, bin them into endless SKUs and price each of them as high as EACH market will pay.For intel, Atom is a solution, not a problem. But's a more or less useless solution now.Atom exists because intel was trying to address markers where "Core" is either too big or too power hungry to fit.But "Core" has been coming down (eg, Surface tablets), some of the market didn't materialize (eg, micro-servers) and other has been taken by ARM (eg, smartphones).

Additionally the Intel culture is pretty much set against making popcorn which is how Andy and the team described all the glue chips, low margin ICs and eventually even their beloved DRAM in the long run. In the RAM business they had some incredibly fast parts (for the time). But the Japanese came is with 'good enough' DRAM and kept driving the prices down. Intel switched to CPUs (the famous Andy question: If we started Intel today what would we focus on?).

Atom is practically a non-issue anymore. Kaby Lake can crank out SKUs very close to Atom power levels (possibly matching it?). So, what is the point of Atom then? Pretty much nothing. Still too expensive for many ARM level projects as typical ARM CPUs are dirt cheap (see above re popcorn). The phone SoCs can be a reasonable item to fab (as mentioned above by raxx7) but everyone else is nearly profit free. I would only foresee Intel doing other foundry work to fill older fabs, as in not very likely. Modern phone SoCs keeping moving to the latest process node.

Time will tell. Of course, we can speculate just fine here in the Ars forums.

Crooked Krzanich has managed his company very badly. He should be fired. Not smart!

Do you two knuckleheads realize how insanely counterproductive you are?

Let me be clear. I dislike Trump.

However.

I dislike people like you essentially just as much. You are useful idiots for your opponents. You make me look like a tool through guilt by association and legitimize their grievances (it stops being a persecution complex when actual persecution happens at anything even remotely resembling an opportunity if you squint hard enough).

You want to bring down Trump? Why don't you start by having the dignity and maturity to choose your battles. These kinds of low-effort, shameless, irrelevant, pandering comments have become a cancer to Ars' community.

A little off topic and, obviously, apple to oranges but I would very much like to see Samsung and others try to enter the desktop CPU market.

Obviously, they'll all be coming in with massive disadvantages in market share and technology, but on the latter, a company like Samsung maybe able to at least rival AMD if not push up against Intel in time.

Need more competitors in the market.IMHO is part of the reason of desktop sales declines.A little stagnant with just Intel at the top and for the longest time, not really innovating.Ryzen was a nice chip from AMD, but again, not enough to nudge the market to excitement.

North Korea and South Korea combined is the size of Utah. Imagine blowing up northern Utah and expecting the southern bit to come out unscathed?!? Push comes to shove, I think the NK regime will simply be annihilated - but the North may be devastated and the South economically wrecked.

In the unlikely event that we ever go to war with North Korea I doubt it will involve blowing things up. That's not how we conduct warfare nowadays, precisely for the reasons you mentioned.

That, and the last thing we need to do is endanger K-pop stars. That would get us in serious trouble with Japan and otaku across the world.

Pyonyang is about 200KM from the border North/South Korean border and 230KM from the China border, presumably a moderately targeted attack could take out Pyongyang and cause minimal to no damage to either of the other countries.

North Korea and South Korea combined is the size of Utah. Imagine blowing up northern Utah and expecting the southern bit to come out unscathed?!? Push comes to shove, I think the NK regime will simply be annihilated - but the North may be devastated and the South economically wrecked.

In the unlikely event that we ever go to war with North Korea I doubt it will involve blowing things up. That's not how we conduct warfare nowadays, precisely for the reasons you mentioned.

That, and the last thing we need to do is endanger K-pop stars. That would get us in serious trouble with Japan and otaku across the world.

Pyonyang is about 200KM from the border North/South Korean border and 230KM from the China border, presumably a moderately targeted attack could take out Pyongyang and cause minimal to no damage to either of the other countries.

And Seoul is so close to the DMZ that the DPRK has tube artillery that can hit the suburbs. There's an the assumption that if a war broke out that Seoul would be overrun within hours and be all but a total loss before the war ended.

North Korea and South Korea combined is the size of Utah. Imagine blowing up northern Utah and expecting the southern bit to come out unscathed?!? Push comes to shove, I think the NK regime will simply be annihilated - but the North may be devastated and the South economically wrecked.

In the unlikely event that we ever go to war with North Korea I doubt it will involve blowing things up. That's not how we conduct warfare nowadays, precisely for the reasons you mentioned.

That, and the last thing we need to do is endanger K-pop stars. That would get us in serious trouble with Japan and otaku across the world.

Pyonyang is about 200KM from the border North/South Korean border and 230KM from the China border, presumably a moderately targeted attack could take out Pyongyang and cause minimal to no damage to either of the other countries.

And Seoul is so close to the DMZ that the DPRK has tube artillery that can hit the suburbs. There's an the assumption that if a war broke out that Seoul would be overrun within hours and be all but a total loss before the war ended.

Fine, but that assumption is based on nothing more than the best intelligence and modeling by experts. Meanwhile, this dude looked at a map! What in the fuck is up with all these pudding-brained chicken hawks who think this is a remotely good idea? I first lived in this place when Bush was in power in the U.S., and it never occurred to me they'd be stupid enough to start anything. Now I know where the nearest bomb shelter is and I have a go bag ready. Nice job at the polls, Trumpsters.

Have many Sammy products myself, but it is still a bit of a separate segment from INTEL still.

Even in the defense industry, many things are produced using multiple sources, a lot of Lockheed and Boeing aircraft and various thing use a lot of Honeywell control systems, is the same thing with ICBMs and a ton of other systems, they all have a niche and make money in the process. It is more or less a matter of applying products to work together, many corporations work in collaboration of course.

Sammy does a lot of output, to respond to the OP, it almost would not surprise me, they are just doing a lot of things in a niche they are vary good at.

Crooked Krzanich has managed his company very badly. He should be fired. Not smart!

Do you two knuckleheads realize how insanely counterproductive you are?

Let me be clear. I dislike Trump.

However.

I dislike people like you essentially just as much. You are useful idiots for your opponents. You make me look like a tool through guilt by association and legitimize their grievances (it stops being a persecution complex when actual persecution happens at anything even remotely resembling an opportunity if you squint hard enough).

You want to bring down Trump? Why don't you start by having the dignity and maturity to choose your battles. These kinds of low-effort, shameless, irrelevant, pandering comments have become a cancer to Ars' community.

Amen. It drives me up the wall how counter-productive people are sometimes. Look at France. Le Pen has a toe in the door already, and what does the far-far-left do? Throw molotow coctails. Stupid idiots. Exactly that will get her elected, orderly right vs chaotic left.

Additionally the Intel culture is pretty much set against making popcorn which is how Andy and the team described all the glue chips, low margin ICs and eventually even their beloved DRAM in the long run. In the RAM business they had some incredibly fast parts (for the time). But the Japanese came is with 'good enough' DRAM and kept driving the prices down. Intel switched to CPUs (the famous Andy question: If we started Intel today what would we focus on?).

DRAM is a low margin business.

Chips manufactured in very old logic processes (130 nm and older, specially 350 nm and older) are generally low margin business for everyone involved.

But chips manufactured in new and not-so-new logic processes (90 nm and newer) are low margin for the fabless chip companies which design and sell them but they are a thick margin business for the (few) foundries where they are manufactured.Again, TSMC's operating margins are around 40-50%, with a lot of revenue coming from not-so-new processes.